"prospects and challenges of private investment in egypt"

The Kemet Boutros Ghali Foundation for Peace and Knowledge organized a symposium entitled “Prospects and Challenges of Private Investment in Egypt” at the Diplomatic Club on Tuesday evening, October 8, 2024. The symposium witnessed great participation and interaction from the attendees, most notably Amr Moussa, former Secretary-General of the Arab League, Mohamed Faek, former Minister of Information, Dr. Ali Al-Moselhi, former Minister of Supply, Engineer Khaled Abdel Aziz, former Minister of Youth and Sports, Minister Soha El-Gendy, former Minister of Immigration and Egyptians Abroad, Dr. Ali El-Din Hilal, and Dr. Mustafa El-Feki. A large number of members of the Foundation’s Board of Trustees, ministers and officials were keen to comment and engage on the topics raised, but everyone agreed that the investment climate in Egypt needs to create a transparent and fair political and legislative environment to attract investment in the country. Mamdouh Abbas, Chairman of the Board of Trustees of the Kemet Boutros Ghali Foundation for Peace and Knowledge, opened the symposium, saying: “We were keen to start this year’s cultural season with a topic that is at the heart of economic development issues in Egypt, which affects all social classes because it is the engine of progress that the country needs to overcome the challenges it faces.” Abbas praised Bahaa El-Din’s efforts, saying: “We are happy to have Dr. Ziad Bahaa El-Din lecture us today, given his long experience in encouraging investment through his presidency of the General Authority for Investment for years, and the important positions he held after that related to economic development issues, which makes him an expert in investment obstacles and problems in Egypt.” Mounir Fakhry Abdel Nour, former Minister of Trade, Industry and Tourism, who moderated the symposium, stressed that the problem with the economy in Egypt is that there are errors in prioritizing and spending without calculation. Our debts have also increased and the focus has been on investments in long-term projects without considering their feasibility. We have also focused on the exchange rate without working to reduce its rate. In addition, we suffer from many imbalances in our international dealings, which is monitored by the numbers and indicators. He stressed that the vast majority are demanding an exit from the crisis, and this will not happen except by attracting foreign investors by creating a transparent and fair political and legislative climate to restore investor confidence in Egypt. Abdel Nour agreed with what Bahaa El Din had proposed regarding his call to cancel the investment law, saying: “I believe that his opinion is very correct, and we should not make investment a law to protect it in one way or another. The rule is that we allow investment.” Bahaa El-Din stressed the importance of diversifying investment and not just focusing on its size, saying: “Increasing investment is important, but what is more important is the quality of this investment.” He added, in an attempt to clarify his point of view and vision, by giving a popular example that simplifies the idea of ​​a restaurant owner who does not find any demand for his restaurant, and therefore has only two options: the first is to improve the production and quality of his service and allocate a budget for advertising to raise the level of that service, and the second option is to stand a man at the door of the restaurant and shout to passersby, calling out: (Today’s food is a quarter of the price).” He continued that this is the most dangerous thing that countries face by returning to tax exemptions or focusing on real estate projects or reducing production control and consumer protection projects, warning of the danger of focusing on the high rate of investment without looking at the size of this investment and the money entering Egypt and its feasibility and developmental returns for the country. He stressed that investment is of utmost importance and necessity today more than in previous years, because it is directly linked and the complications increase with it due to its intertwining and connection with many issues, including unemployment, the labor market, inflation, brain drain, budget deficit and other issues and topics, stressing that all of the above has no solution except by increasing investment rates in Egypt, the Arab world and abroad because through it the strength and ability of the state to spend appear, saying: "What is required is to increase the rates and quality of investment in Egypt." In an attempt to clarify his vision, "Bahaa El-Din" raised a number of questions, the first of which was why do we suffer in Egypt from not preparing the appropriate climate for investment despite the state's continuous talk for more than 10 years? What are the obstacles and how can we start to confront these challenges? Bahaa El-Din explained that private investment does not mean the investment activity carried out by the state in national projects, nor does it mean investing in securities, which is certainly welcome, but it aims to expand existing companies and projects, but they are expanded through transferring ownership from one party to another, but they do not add productive capacity to the state, which is an inevitable and necessary distinction. He stressed that the success of investment is not in the amount of money invested, but rather in the benefit it brings in localizing technology and adding expertise and other economic indicators that add it to the state's economy, and thus benefit citizens. Bahaa El-Din wondered: "Why have we been facing the lack of a good investment climate for 50 years?" Considering that the story began in the late sixties and seventies following the 1967 setback and the October 1973 war, explaining that the first investment law was Law No. 61 issued in 1971, which was adopted by Dr. Ibrahim Shehata, who was one of the first to adopt the idea of ​​this project through national legislation regulating investment. Bahaa El-Din continued: “After the October War, Law No. 74 was issued, which was called in the media (the Openness Law),” noting that each of these projects has its own philosophy and architecture, noting that Law 61 defines a group of specific fields and activities for which it provides a group of incentives and procedures to activate them. Bahaa El-Din pointed out that since the issuance of Law No. 61, about 12 investment laws have been issued, saying: “For 50 years, we have lived with the same philosophy regarding specific projects and activities that provide advantages, and this model has been no longer valid for the past 30 years because it could be an attractive law for the socialist experiment.”

Adding that specifying specific areas for investment is illogical, and the most dangerous thing is that its negative effects are that Egypt's tax revenue goes abroad, as we donate our taxes to foreign countries. He pointed out that with regard to free zones, they are controversial, and we must realize that the world has changed today, and competition has become in competing with the cost of production, providing land and continuous energy sources, training and workforce, speed and efficiency of resolving disputes, and the legislative environment that guarantees the investor, and if we have to catch up with the countries of the world, we must leave that old system. Bahaa El-Din wondered: “Why does the investment environment pose a major challenge to Egypt despite its highly diversified economy, and it is known to have a good workforce that is known for its quick learning and adaptation, so why does the dilemma persist?” He said: “If we add to the problems we mentioned previously, there have been additional challenges for 10 years, the first of which is the expansion of the state’s role in the economy through the intervention of many parties, and thus the crowding out of the private sector, the increase in public spending and the directing of resources to projects, and the increase in the cost of business. Here we point out that the income tax is 22.5%, which is the lowest in the world, in addition to the multiplicity of taxes.” Bahaa El-Din revealed that the most dangerous thing from his point of view is the multiplicity of fees on everything collected by more than one party, which are factors that limit expansion and operation, explaining the difference between adding and imposing a fee on the road for its maintenance and imposing fees on a factory because it wants to build a new floor for expansion, saying: “The bleeding of fees is the worst thing that people are suffering from currently,” adding that we cannot all mobilize to promote and then everyone turns into censors, as the institutional map has become very tiring and exhausting and it is not permissible to work with it. He continued: “The origins of the crisis we are facing are still present, and they need immediate treatment, although we have overcome the situation by not falling into the abyss,” considering that we have a chance to overcome it, and warned that the government’s new discourse makes him fear that we are revolving in the same orbit of the past 50 years. Bahaa El-Din continued: “I hope not to celebrate the end of the crisis because the people and citizens are the ones who paid the price. They are the ones who bore the increase in prices by more than 30% over the past three years, and they are the ones who bore many crises represented by the shortage of medicines and food and the increase in prices, and therefore we must take into account the feelings of the people.” Bahaa El-Din called for the cancellation of the investment law in Egypt, stressing that it is no longer valid and it is inappropriate to work with it in Egypt, saying: “I stick to my opinion to cancel the investment law because it is actually no longer valid, and many countries now no longer work with such laws. On the contrary, we find some countries issuing investment legislation and laws to restrict investment in specific activities, not to expand them and provide privileges,” citing the incident of the United States of America recently issuing legislation to limit China’s encroachment in acquiring ports for fear of its noticeable activity in this regard in many countries. Bahaa El-Din continued: “The issue will not be resolved by law. There is a basic philosophy that we must completely change when talking about investment in Egypt and its development, and we must re-understand the issue from the beginning. I believe that the day Egypt cancels the investment law will be an important day.” He stressed that the private sector is not, as some people reduce it to a specific group of businessmen, but rather includes everyone who takes on the risk of capital, even the farmer, we can call him a private sector owner, stressing that we must deal with the idea in its broadest sense. In response to some people’s demands for the state to withdraw from participating in the economy, and in light of the results announced regarding the Egyptian Sovereign Fund, Bahaa El-Din said: “The purpose is not for the state to withdraw from participating in the economy, and I am not a supporter of the state’s withdrawal, but rather what is required is controls, determinants and rules for what is known as the rules of competitive neutrality, which is what the document should have included, not an exit by specifying certain percentages as included in the document,” stressing that Egypt does not need to amend a document that was born dead, and we need a document that defines the relationship between the investor and the state. He pointed out that the state ownership document did not achieve the desired and previously announced targets regarding the size of the exit, and that about 85% of the proceeds came from the Ras El-Hikma deal, praising the deal, its importance and timing.

Bahaa El-Din warned against excessive optimism, saying: “The most dangerous thing that can happen is an enthusiastic revolution that is not met with any deep reform,” stressing that Egypt’s future is linked to industry, and that the top priority is training the workforce.

Mohamed El-Sweedy, head of the Federation of Industries, stressed that industry and tourism are two sides of the same coin, but industry is the nerve and locomotive of development in the state, saying: “The current policy in light of investment through promising things that it cannot do is inappropriate, and the investor wants to know the truth, even the difficult circumstances must be understood before risking his investments, and the state must not promise what it cannot fulfill,” adding that the process is not only issuing laws, but the mechanism for implementing those laws. Al-Suwaidi said that the size of the industry in Egypt has a good climate because it has more than 110 million Egyptians, stressing that investing in the human element is a necessity, considering that the priority now is to export 5 or 6 goods, and it is better for me to look for reducing imports. Ahmed Al-Wakil, head of the General Federation of Chambers of Commerce, disagreed with what Bahaa El-Din had proposed, stressing that he should have addressed the period prior to the 1967 setback, considering that the dilemma began about 72 years ago and not 50 years ago. “Investment is the surplus savings of countries and individuals, and we have to be an attractive country,” said Al-Wakil, asking: “What have we done for that?” He answered at the same time: “Nothing,” adding that the Moroccan component in Renault cars now amounts to about 59%, and when Peugeot came to Egypt, it left without returning due to the unsuitable climate. The same thing also applies to Toyota in Turkey, where the Turkish component has reached about 72%, considering that the problem is that the
The private sector in Egypt has been suffering from the effects of years extending over 72 years, not 50 years ago.
Dr. Hesham Zaazou, former Minister of Tourism, stressed the importance of focusing on the tourism sector when talking about the Egyptian economy, criticizing the lack of a specific strategy regarding this sector, while targets were previously announced for the number of tourists to reach 28 million tourists, and the current minister said that the target is about 31 million in the coming years.
"Zazou" objected to merging the Ministry of Tourism with the Ministry of Antiquities, stressing that the original should be merged with the Ministry of Aviation, citing the experience of Turkey and Greece in this regard.